[OPE-L:1425] Re: international value

glevy@acnet.pratt.edu (glevy@acnet.pratt.edu)
Mon, 11 Mar 1996 05:16:52 -0800

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Paul C wrote in [OPE-L:1416]:

> The continued operation of plants paying
> widely different wage rates may indicate that there
> are factors other than direct wage rates that affect
> production costs differently accross regions.

Certainly true. The multi-plant structure, among other advantages, also
is an advantage to the extent that it increases the "flexibility" of
capital and their relative bargaining power against labor.

> But granting that the phenomenon that Jerry raises
> actually exists in an undiluted form, what does this
> tell us about the hypothesis that regional/nation wage
> differentials are determined by mainly by productivity
> differentials? <snip>
> I wish to argue that the main determinant of
> wage rates is the general level of productivity accross
> the economy as a whole modified by individual contingencies in the
> case of particular countries.

I would say instead that productivity increases *only* create the
*possibility* of wage increases. To be sure, the level of productivity
growth sets limits to the extent to which wages *can* be increased under
conditions of capitalist production. The *actual*, as distinct from the
potential, level of wages will also depend on many region-specific
issues that I discussed in a previous post.

In OPE-L Solidarity,